Adequate intake of live probiotics can provide benefits to human health and wellbeing. However, free probiotics tend to lose their viability during the production, storage, and distribution of foods, as well as during their passage through the human gastrointestinal tract. A well-designed probiotic encapsulation system can enhance the viability of probiotics in foods and within the gastrointestinal tract, thereby ensuring more live bacteria reach the colon in an active form. This review summarizes the design of encapsulated probiotics and focuses on recent progress on the development of co-encapsulation systems containing mixed probiotics, mixtures of probiotics and prebiotics ("synbiotics"), or mixtures of probiotics and nutraceuticals ("nutrabiotics"). It then discusses the application of these co-encapsulation systems in functional foods, and highlights their potential benefits for human health, including regulating intestinal flora balance, safeguarding intestinal barrier integrity, maintaining immune homeostasis, and regulating blood glucose levels. Finally, challenges facing the large-scale commercialization of probiotic-loaded functional foods are discussed and suggestions for improving their performance are highlighted.